Question 1

A _______ relationship exists between domestic income and net export spending.

Accepted Answer

A)   negative
B)   positive
C)   secondary
D)   constantE) C) and D)
F) A) and B)

Question 2

The figure shows planned aggregate expenditure and output for an economy. 2. Which change would shift the PAE curve upward? A)  An increase in wealth. B)  An increase in interest rates. C)  And increase in taxes. D)  An increase in imports." class="answers-bank-image d-inline" rel="preload" > Suppose that the economy starts at PAE2. Which change would shift the PAE curve upward?

Accepted Answer

A)   An increase in wealth.
B)   An increase in interest rates.
C)   And increase in taxes.
D)   An increase in imports.E) None of the above
F) B) and D)

Question 3

Which of the following could cause a decrease in consumption?

Accepted Answer

A)   Income increases.
B)   Interest rates increase.
C)   Wealth increases.
D)   Expected future income increases.E) A) and B)
F) B) and C)

Question 4

The table shown displays the spending habits of three coworkers  Who has the lowest MPC?

Accepted Answer

A)   Mary
B)   Chris
C)   Steve
D)   There is not enough information to answer this question.E) A) and C)
F) C) and D)

Question 5

When PAE decreases an economy will move towards:

Accepted Answer

A)   lower levels of equilibrium GDP.
B)   higher levels of equilibrium GDP.
C)   constant levels of GDP.
D)   higher levels of equilibrium aggregate expenditure.E) A) and B)
F) A) and C)

Question 6

If the marginal propensity to consume is 0.9, it would mean that:

Accepted Answer

A)   consumers spend $9 out of every $10 of additional disposable income.
B)   consumers save $9 out of every $10 of additional disposable income.
C)   consumers spend $1 out of every $10 of additional disposable income.
D)   consumers spend $9.90 out of every $10 of additional disposable income.E) A) and B)
F) A) and C)

Question 7

In the equation PAE = A + bY, the independent part of the equation that depends on income is:

Accepted Answer

A)   b.
B)   Y.
C)   A.
D)   PAE.E) A) and B)
F) A) and C)

Question 8

The figure shows planned aggregate expenditure and output for an economy. 2. Which change would cause a move from PAE2 to PAE1? A)  The wealth level increases. B)  Interest rates increase. C)  Taxes decrease. D)  Domestic income decreases." class="answers-bank-image d-inline" rel="preload" > Suppose that the economy starts at PAE2. Which change would cause a move from PAE2 to PAE1?

Accepted Answer

A)   The wealth level increases.
B)   Interest rates increase.
C)   Taxes decrease.
D)   Domestic income decreases.E) C) and D)
F) B) and C)

Question 9

Which of the following scenarios would decrease the net exports component of aggregate expenditure?

Accepted Answer

A)   The euro increases in value relative to other currencies.
B)   A "Buy American" campaign reduces the amount of goods imported.
C)   The United States experiences a recession.
D)   A decrease in tariffs makes it less expensive to import goods into the United States.E) All of the above
F) A) and C)

Question 10

Which of the following is not a determinant of investment spending?

Accepted Answer

A)   Real income
B)   Interest rates
C)   Taxes
D)   Expected profitabilityE) A) and B)
F) B) and C)

Question 11

The figure shows planned aggregate expenditure and output for an economy. 1. This level of GDP would be considered: A)  inflationary. B)  recessionary. C)  above full employment. D)  a natural rate of output." class="answers-bank-image d-inline" rel="preload" > Suppose that the economy's output is Y1. This level of GDP would be considered:

Accepted Answer

A)   inflationary.
B)   recessionary.
C)   above full employment.
D)   a natural rate of output.E) C) and D)
F) A) and D)

Question 12

The multiplier effect suggests that:

Accepted Answer

A)   a ripple effect occurs from one person's initial spending.
B)   spending $1 will create more than a $1 increase in GDP.
C)   a tax cut will increase GDP by more than the amount of the initial tax cut.
D)   All of these are true.E) A) and C)
F) B) and C)

Question 13

The figure shows planned aggregate expenditure and output for an economy. 2 to PAE 3 B)  PAE 1 to PAE 2 C)  Y 1 to Y 2 D)  Y 2 to Y 3" class="answers-bank-image d-inline" rel="preload" > The distance between what 2 lines illustrate a recessionary output gap?

Accepted Answer

A)   PAE 2 to PAE 3
B)   PAE 1 to PAE 2
C)   Y 1 to Y 2
D)   Y 2 to Y 3E) All of the above
F) A) and B)

Question 14

If the MPC is 0.6, and the government increases spending by $300 billion, the overall effect on GDP will be:

Accepted Answer

A)   a decrease of $750 billion.
B)   an increase of $750 billion.
C)   a decrease of $550 billion.
D)   an increase of $250 billion.E) All of the above
F) A) and C)

Question 15

The figure shows planned aggregate expenditure and output for an economy. 2 and PAE 3 B)  PAE 1 and PAE 2 C)  Y 1 and Y 2 D)  Y 2 and Y 3" class="answers-bank-image d-inline" rel="preload" > The distance between _______ illustrates a recessionary expenditure gap.

Accepted Answer

A)   PAE 2 and PAE 3
B)   PAE 1 and PAE 2
C)   Y 1 and Y 2
D)   Y 2 and Y 3E) A) and B)
F) A) and C)

Question 16

If spending decreases by $400, and GDP decreases by $1,000 as a result, what must the MPC be?

Accepted Answer

A)   0.6
B)   0.75
C)   4
D)   2.5E) A) and B)
F) A) and C)

Question 17

A decrease in government spending would:

Accepted Answer

A)   decrease autonomous spending.
B)   increase spending dependent on income.
C)   increase autonomous spending.
D)   decrease spending dependent on income.E) All of the above
F) None of the above

Question 18

In a recession, the federal government may choose to increase spending in order to:

Accepted Answer

A)   decrease real interest rates.
B)   decrease the overall price level.
C)   achieve full-employment GDP.
D)   increase exports.E) C) and D)
F) B) and D)

Question 19

During the Great Depression, unemployment was so bad that nearly _______ of the labor force was unemployed.

Accepted Answer

A)   half
B)   three quarters
C)   a quarter
D)   one-thirdE) A) and B)
F) A) and C)

Question 20

Net exports equal:

Accepted Answer

A)   imports minus exports.
B)   imports minus investment.
C)   exports minus imports.
D)   exports minus investment.E) A) and B)
F) A) and C)

Exam 11: Aggregateexpenditures

In a recession, the federal government may choose to increase spending in order to:

Correct AnswerverifiedShow Answer

The figure shows planned aggregate expenditure and output for an economy. The distance between what 2 lines illustrate a recessionary output gap?

Correct AnswerverifiedShow Answer

A decrease in government spending would:

Correct AnswerverifiedShow Answer

If spending decreases by $400, and GDP decreases by $1,000 as a result, what must the MPC be?

Correct AnswerverifiedShow Answer

Which of the following scenarios would decrease the net exports component of aggregate expenditure?

Correct AnswerverifiedShow Answer

The multiplier effect suggests that:

Correct AnswerverifiedShow Answer

The figure shows planned aggregate expenditure and output for an economy. The distance between _______ illustrates a recessionary expenditure gap.

Correct AnswerverifiedShow Answer

Net exports equal:

Correct AnswerverifiedShow Answer

The figure shows planned aggregate expenditure and output for an economy. Suppose that the economy starts at PAE2. Which change would cause a move from PAE2 to PAE1?

Correct AnswerverifiedShow Answer

In the equation PAE = A + bY, the independent part of the equation that depends on income is:

Correct AnswerverifiedShow Answer

When PAE decreases an economy will move towards:

Correct AnswerverifiedShow Answer

A _______ relationship exists between domestic income and net export spending.

Correct AnswerverifiedShow Answer

The table shown displays the spending habits of three coworkers Who has the lowest MPC?

Correct AnswerverifiedShow Answer

The figure shows planned aggregate expenditure and output for an economy. Suppose that the economy's output is Y1. This level of GDP would be considered:

Correct AnswerverifiedShow Answer

The figure shows planned aggregate expenditure and output for an economy. Suppose that the economy starts at PAE2. Which change would shift the PAE curve upward?

Correct AnswerverifiedShow Answer

If the marginal propensity to consume is 0.9, it would mean that:

Correct AnswerverifiedShow Answer

Which of the following could cause a decrease in consumption?

Correct AnswerverifiedShow Answer

If the MPC is 0.6, and the government increases spending by $300 billion, the overall effect on GDP will be:

Correct AnswerverifiedShow Answer

Which of the following is not a determinant of investment spending?

Correct AnswerverifiedShow Answer

During the Great Depression, unemployment was so bad that nearly _______ of the labor force was unemployed.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The figure shows planned aggregate expenditure and output for an economy. Suppose that the economy starts at PAE₂. Which change would cause a move from PAE₂ to PAE₁?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The figure shows planned aggregate expenditure and output for an economy. Suppose that the economy's output is Y₁. This level of GDP would be considered:

Correct Answer
verified

The figure shows planned aggregate expenditure and output for an economy. Suppose that the economy starts at PAE₂. Which change would shift the PAE curve upward?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified